If a "conservative" wanted to increase aggregate demand, which of the following would he or she tend to favor?
A)An increase in government spending, because it has a larger multiplier than tax changes.
B)A decrease in transfer payments, because it keeps the public sector small.
C)An increase in transfer payments, because it has a larger multiplier than tax changes.
D)A decrease in taxes, because it makes the public sector smaller.

Question

Quizplus · Accepted Answer

Conservatives generally favor smaller government and lower taxes. Decreasing taxes would put more money in the hands of individuals and businesses, which could lead to an increase in consumption and investment, ultimately increasing aggregate demand.

If a "Conservative" Wanted to Increase Aggregate Demand, Which of the Following